>> welcome to "lunch money" where we tied together stories in business news. t minus four days until congress goes on vacation. still no deal. is this a series of interviews. today we're going to show how you buy fake toys. new bikes actually cost less than a vespa. how much would you pay for a pen? let's are all for politics. it was a cozy, intimate weekend

on capital hill. patty murray trying to come up with some sort of budget deal. the deadline set after the 16 day shutdown is this friday. after that, congress goes on vacation and does not come back until 2014. >> negotiations are moving in the right direction. to i am hopeful will be able come together. >> the likelihood is still in the 50% range. i would like to give you a more definitive answer. >> that is the way it goes. always right up to the deadline. are nearing a smaller deal that would replace the sequester cuts over the next two years. we are going to replace these with other sources of revenue. taxes.r

>> you heard that right. to tackle the major long-term issues. they want to trim automatic spending cuts. back on the self imposed budget cuts that were meant to force washington to get tough on spending. that is the mo. republicans have been expecting he would come through. give the lowest grade to republicans to ryan. he is proving he is a fiscal fake. it is his job to stand up and tell the truth. when he says we can raise spending for defense back to the or domestic, level that is evidence we're going in the wrong direction. >> that has to hurt. he was president reagan's top budget man. they're supposed to be in ryan's

corner. stockman says going back on the sequestration is a load of, you decide. >> it is a washington beltway lie that we cannot live it with a six hundred billion of outlays for defense. 50% more than we had in 2000. we had no new industrial in the 200s with us since then billion more than bill kenton -- bill clinton left in today's real dollars. >> can you get behind a deal that comes out of the stocks? a total joke. i hope at least 70 people would understand if they do not get at entitlement reform it is going .o be far worse later the republicans would be right

to reject this a deal. >> there's plenty more where that came from. he calls janet yellen the architect of said disaster and says this is dangerous. you can watch online at bloomberg.com/television. we are off to wall street and an exclusive look inside the 2014 outlook. we have a new mega-airline in the skies. ceo of ther from the new american airlines. thousands of protesters took to the street. server after out he shelved a long planned training to focus on ties with russia. they toppled and decapitated a landmark statue of vladimir lenin. take a look.

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>> we are also streaming live on bloomberg.com, your tablet, and smartphone. a 4.1 trillion dollars. when blackrock speaks come at you might want to do yourself a favor and listen. theirust came out with two thousand 14 investment outlook. erik schatzker got the exclusive in the trading floor.

what is on the ceo's mind? he is thinking about the final version of the volcker rule. it is coming out this week. >> there's a possibility we are going to go too far. i'm not being a pessimist. i am being pretty pragmatic. i do think i know more about the markets then most. i am alarmed that it may be too far it may have some unintended issues that could be impactful. >> he is alarmed at the leverage ratios. >> and expresses i do not believe will be coming from banks. it may not come in financial services. maybe it is technology.

it will be cybersecurity. the big crisis i do not think will be in an ansell services. >> number two is the blackrock president. he says it is time to be a little cautious. time, people are very concerned about their future investment. they have seen the stock market do pretty well. they are concerned about where bonds are. they're looking to squeeze more return out of their assets. how much more can they squeeze when they have the finger on the button? we have an institute that an exhaustiven way. over half of our senior portfolio managers think that lower growth for longer is where we're going to be. let me describe a little bit about what that means.

people think they are diversified in their risk. bonds and stocks have , they may notted be as diversified in risk as they think. we are looking to get them to think about a 2.5% gdp growth which is fairly slow. stocks are being priced more about the price of momentum versus the earnings. revenues are not coming in where everybody thought. pretty top asng far as valuation go. they should look to diversify into other assets such as real estate.

as i said, over half of our portfolio managers and for longer. next year to be a bit of a rates arer as far as and where the stock market goes. most importantly, people have to get invested. you cannot sit on the sidelines. while there is this uncertainty, there is about $10 trillion sitting in bank account earning almost zero. people into the market but in a much more diversified basket than just simple stocks and bonds. >> when you say low for longer, is that more a call on the economy or market or both? >> both. we think growth is going too slow for a longer time. we think the fed is going to keep monetary policy easy. short-term rates we think will

remain where they are. longer term will budget up a bit. these are pretty high. we use a lot to choose out of that. we have a little bit more. we want to be a bit cautious for the longer-term right now. we want to make sure that people are using this diversification to understand that correlation may work against them. >> the rule next year will be a huge factor in how that plays out. we spoke with peter fisher as well. >> i think all over the world we see countries trying to make a handoff from monetary policy to fiscal policy. >> they would love to do that. >> they are trying to let go of the reins. they would like to not be the only game in town. that may be optimistic.

i think we would like see fiscal policy pay a bigger role. they're trying to get a handoff to consumption of structural reform. central bankers are going to be important. they would love to be less important. onlyuld like to be the game in town. >> to a certain degree, markets are not letting them. the free moment about the obsession with tapering. and now we're looking as though we might see the taper this month perhaps. an unhealthy succession -- obsession? >> it is probably misguided. aper will take place in context. will the bank of japan and ecb try to offset whatever tightening comes? you want to think about that kind of upset.

would've re: seen enough tents -- we have already seen enough where they are finding some way not to just have everyone upset on taper. i think it will be important but not the only game in town. fed successfully offset the fed of the taper on its own. the ecb to try to offset it themselves? it.hey are focused on whether they can remains to be seen. that forward guidance is a powerful tool. forward guidance is not as powerful as you would like. the bank of england has seen the market protest a little bit. time withhad a harder forward guidance leaning down. the fed will find some of that.

one of the things they may consider is standing -- sending out. bottom line, where'd you put your money? here is dennis stockman. >> the biggest risk reward trade-off for long-term investment is japanese equities. >> still? >> absolutely. the japanese market was good to investors this year. we have been positive on japan for over a year. it was not magic. it was a combination of factors that were irresistible. valuation, earnings growth, political change, a clear of pessimisma lot giving them the rise for greater optimism. a chartt to bring up

you provided us. earnings growth helps to explain what is going on in japan. pilingdy thinks they're into japanese equities because of abenomics. this does not explain everything. expansion in 2013, it has been less of a story in japan than any of the other world markets. it explains much more in the dozennd in europe than a japan. the earnings growth has really best. >> you can watch our exclusive interviews online at bloomberg.com/tv. on coins.ur hands it is a lot harder than you thought. we will walk you through how right after the break.

the harley davidson ceo tells us about all the new bikes that cost less than a vespa. ♪

>> 12 days of the virtual corning has had a ride. baidu suspended payment of bitcoin. we decided to celebrate the 12 days right here. matt miller try to buy one last week. it did not go so well. max is the first one that recommended to me. either you have to wait four days which seemed a long amount of time to get started or you have to give them everything like bank account details,

credit card details, visa, social security. i felt uncomfortable giving that kind of information. the whole point of me getting a tcoi is so that i can move my life off the grid and get away from big brother and move into the mountains. >> is that the point? >> i am really doing it because my boss told me to. it is a great idea. ?> you do not have bitcoin >> i do not. over the week when i was using a local one to try to find other people. we could never meet up. $1200. asking for like last night i called up max. " no problem, i'll have one in 10 minutes." >> you have bitcoin.

>> he is. i personally do not own very many. i called up a guy. >> he bought more than one. >> i just bought one format. >> matt the guy has his guy who sold them a bitcoin. formatt is selling one $800. >> i feel crazy giving away this many 20s for one bitcoin. . can buy gasoline with this about $800 worth of gas. here i have a wallet. they have an outlet for my iphone. a bitcoin on his phone. code.e a picture of my qr

>> what are you doing? you are syncing them? >> i am going to scan his own. >> all right. >> is it not working? >> a great. it is like a bill gates demo. alwaysst infamously will fail. >> this is one of the issues. it has been so hard for me to figure this out. >> show us what is on the screen. what shows up? >> i can say this is the address i put him in. i can put him in as matt miller. now it sends it. the interest is the rising .alue of the coin -- bitcoin this is worth whatever you're willing to pay for it.

>> now i have got it. that is happened. you just bought a bitcoin. >> i can tweak it. i can show on facebook that i just got one. i believe i can ask for tips. soon.to load up >> why did you just do it this way? >> people do. on thursday, there is a meeting every week where everyone goes to send them back and forth to each other. many meetingsthat like that. i was trying to meet a guy at a starbucks to pick one up. >> congratulations. you've got your bitcoin. >> you can follow him and his 12 days of bitcoin. up next, it is a done deal.

airways airlines and us have come together as one. we will hear from the new ceo. yours for $44,000. that is later in luxuries. ♪ exodus 26 minutes past the hour. let's get you caught up on where stocks are trading. we are sick another day of rallying. continuing games. they're up about a quarter percent. first up is cisco. they are acquiring the competitor. 3.5 billion dollars to include that. it is the largest. we're are also looking at

jcpenney. they're taking back some market share. they expect some positive things. the markets more on in 30 minutes.

>> we are also streaming live on bloomberg.com, your tablet, and smartphone. today's moving pictures with the video is the story. the preparations are underway for the national memorial service for nelson mandela. tomorrow it'll be in a 90,000 seat soccer stadium -- soccer stadium. he made his last public world cup.during the 200,000 protesters took to the streets of bangkok to call for the country's prime minister to step down.

this is a new effort to change this. ofzzard of lies conditions turn these into a virtual snowball. supposed to fall until halftime. more than eight inches fell during the afternoon. deals, the world's biggest airline takes off today. executives of american airlines and u.s. airways signed the final merger documents. create a new company worth about $18 billion. this began trading today. is seeking one billion in combined revenues and cost savings. we asked what this all means for airfares. >> airfares are going to do what

airfares do. they are related to all sort of things like this. this is not affected at all. of thekeeping all airplanes. that is why this merger works. we need all of that. only 12 overlapping at works -- networks. supply will be unchanged. prices in our business move a lot based on any sort of factors. this will not be one of those. beene big airlines have cutting capacity as well as focusing on more customers. the has created some wiggle room. >> coming up, the ceo of harley of a new $700 us

bike that is better than some of the ones that cost more. cheaper than a vespa. is sellinghotel everything. we will explain luxury. could that be? a browncarol master in ups uniform? she's taking us inside ups tomorrow. better get these boxes moving. she will be live from the companies. it shall also be joined by scott davis. maybe he will show some packages, two. -- too. ♪

>> harley davidson pushing the envelope. it is the first and only motorcycle that offers a gps. it is also new think that opening new factories in india to reach asian customers. the question. is a cheap bike still a hog? >> it is a real harley. it has the same look and feel. this is a big event for us. a few years ago, we really talked about the strategy going forward and how he wanted to expand the brand and make it more meaningful to other -- ridrs like writers ers. develop a while to these and bring them to the market. this is a total new frame.

it is agile. it is nimble. it was really developed with the voice of the customer. we did talk to over 3000 customers and dealers in 10 different countries. ofs bike is the culmination that voice of the customer input. thes really intended for new generation. >> how hard was it to go to a liquid cooled engine? it was not really difficult. every bike that we designed -- why? >> it is part of this whole being agile, nimble, being in urban bike. think about the drivetrain in the engine for every bike that we designed and built. not that we're going to use it across the entire line. >> that is true.

in traffic ining new york, i watch the temperature gauge just client. it is scary. are moving heavy overseas. i think i saw a prediction that 40% of your sales will come from overseas next year. >> this goes back to when i just started. we were just putting the stake in the ground on some basic things we were targeting. to get to were trying some of these by 2014. last year we were probably in the mid-30's. we are inching up on that. apple try to do a lower-cost version of the iphone 5. a little from the brand. the customers overseas do not understand it as much. are you concerned? >> aegon by a $20,000 harley and

people are buying them for 6000. i'm not totally impressed with that. >> this is an entry point for a lot in new writers. if you think about market even outside of the united states, we will want to this initially in india am portugal, italy and spain. big markets. loving- between 2000 2000 12 there were 13 million motorcycles sold. most were lower displacement motorcycles. there is an appetite growing for the higher end bikes. our goal is to be there to meet and greet these customers as their personal disposable income increases and they move up. we think this is a perfect intro level bike for those customers. 197%e stock has risen

since he took the helm. what is the plan? >> this is something we have talked about continuously with our board. i think we have a very clear view on one the secession looks like. succession looks like. as we do transition, the good news is there's going to be a great team in place with a lot of runway left. more importantly, these people have been part of putting the strategy in place. they are part of building everything we have done to get us where we are. we have completely revamped how morenufactured bikes in a manufactured way. we completely revamped how we design and develop bikes. shorter timeframe. less costly. more focused. we are bringing new products to

market that will not only satisfy and excite our core customers like the rushmore lunch but also like the street bikes for the younger writers. we have a whole pipeline. >> the first production is to come out with a gps. you would think someone else would do it. >> from my perspective, i do not think the future has ever been brighter. >> he wanted to sell more bikes, and twoly overseas women. aey have two loan how to ride bike from harley davidson. need a christmas gift for the man who has everything? we can help. it will cost you though. refreshinge into your home. >> an option you will not want to miss in "luxury." ♪

>> it is all about what you can buy and where you can buy it, especially in nigeria. africa's largest oil producer and there are plenty of people with money to spend. tom gibson reports. sparkling watches are not in the shop windows of zero. or zero -- these two have to go abroad for luxury staples. now big brands come to them. >> there is a huge opportunity to be here. end but at the highest also there is a middle class that is really growing that needs access.

this economy is expected to grow in 2014. >> international brands are keen to gain a foothold. one of these is porsche which recently opened this in victoria island. >> the middle east and african region is the force largest globally. it becomes more key with china and india and africa. you can expect more flashy and

they are. >> they are selling just about everything. are auctioning this as part of a major re-for richmond. >> feel like you need a touch of five-star luxury in your home? now is your chance. this is auctioning entire sleeves, beds, paintings, the lot. this is being stripped. the guestrooms and public areas are getting a new look, an update from the neoclassical feel. new technology is being installed with an eye for the building's history. among the highlights, two crystal columns chandeliers with a price of over $8,000. is those items are a bit

much, then how about silver in silver napkin holders? they closes next week and will reopen in autumn of next year. what about a pen? turns out he have to go to germany. specifically have to go to mo ntblanc. >> white gloves at the pen factory. to handle 832,000 year old limited edition. who really uses pens in the digital age? >> more notifications i get, the more i appreciate something headroom in. there's a hunger for it.

culture.into mass they made 88 charlie chaplin editions which have tripled the prices at auction. says $22,000 per pen, what you say? >> many people say that. if they see this first they say it is crazy but then we can show how it is made. >> i am holding 200,000 euros worth of gold. this weighs five kilos. first to get rolled into the right form and then cut out and stamped into the mnib. with the hundred steps, no two pens are ever alike. extra 1200 euros for the basic service. catch the dna from the hands and the movements and then .e can adapt to the handwriting

>> for a fully personalized pen, production takes 2.5 years and up to one million euros. thing is whenul ever we have a collector who has been collecting for years, whenever we does his instrument -- >> >> to not worry about misplacing such an expensive item. >> you stop using us losing your pen as soon as you buy a montblanc instrument. >> it is a writing instrument. bloomberg, homburg. for more on the good life and all things luxury you can visit bloomberg.com/luxury. today's mystery meat. some christmas gifts are priceless. >> stop right there.

that is wonderful. >> what do you think? what is that? >> it is a major award. fans or of a christmas story can vote on the chance to stay for two nights in the house where ralphie lived. it is in cleveland. if that is what you're into, you will enjoy it. ♪

approaching 56 past the hour. that means bloomberg television is on the markets. let us check on where stocks are trading. little a rally here, a one. on the heels of

the better than estimated job numbers. the s&p higher. the essence before the year is better than 25%. it is not just equity markets that have been climbing. boomrt market is seeing a in demand. by dollar could be spurred easy money. one of the largest art shows has come to a close. there is still high demand for fine art. how itn find out just is. frenzy ofas just a buying. we have five or 10 in miami. we were rushing around to find out what was still available. it is a super high price.

>> buyers were flocking to miami to pick up pieces by modern and contemporary artists. warren buffett booked 210 flights out of there during the timeframe. they were happy to get into the market. pushed each to the owner of one of these coveted pieces. >> there is a synonymy of money heading toward the island which is the art world. at the top and there is huge interest from all the new economies that have just come back for russia and new york being in dubai and abu dhabi. the new economies are underinvested in arts. they have zero. is a top and one that

did see this. 3 billion.ore them this is an increase. they sold about $200 million worth of contemporary art. they held the largest option ever. including the triptych that became the most expensive art works sold at auction. these are being driven by the allocated money that has very limited demand. they workold days, fine because of collection and passion. now they are just small factors. now it is allocating money from your basket of wealth. allocatingng it about 5% of their words. he wanted to get into the

, sotheby's has been having issues of their own. digest recently leave the company. we will be on the markets and in about 30 minutes time. "bloomberg west" is up next. ♪

>> live from peer three in san francisco. welcome to the early edition of west./"rg i am emily chang. the focus is on business and investment in the future. companies from apple to facebook are demanding u.s. surveillance reform in thewake of edwards noted's -- wake of edwards d snowden's leaks. we lk